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Rankankan v. JPMorgan Chase Bank N.A.

United States District Court, N.D. California

June 22, 2016

JPMORGAN CHASE BANK, N.A., et al., Defendants.




         Plaintiff Ali Rankankan brought this action in the California Superior Court for Contra Costa County alleging several claims arising from the foreclosure of certain property in San Ramon, California. Defendant JPMorgan Chase Bank, N.A. ("Chase") removed to this Court, asserting diversity jurisdiction on the basis that Defendant MTC Financial Inc. d/b/a Trustee Corps ("MTC"), a California corporation, was fraudulently joined. Rankankan now moves for a preliminary injunction and to remand to state court, and Chase and MTC each move to dismiss. The Court finds the Motion to Remand suitable for resolution without oral argument and VACATES the hearing previously set for June 24, 2016. For the reasons discussed below, Rankankan's Motion to Remand is GRANTED. This Court lacks jurisdiction over the case in its present form and thus does not reach the remaining motions.[1]


         A. Allegations of the Complaint

         Rankankan's allegations are generally taken as true at the pleading stage, and are therefore recited here as fact. Nothing in this Order should be construed as resolving any issue of fact that might be disputed at a later stage of the case.

         At all times relevant, Rankankan resided in Contra Costa County, California, and owned property at 9640 Acosta Boulevard in San Ramon (the "Property"). Compl.[2] ¶ 1. Around February of 2005, Rankankan obtained a home equity line of credit (the "First HELOC") from Washington Mutual Bank ("WaMu")-a predecessor to Defendant Chase-in exchange for executing a promissory note secured by a deed of trust (the "WaMu Deed of Trust") on the Property. Id. ¶ 9. The WaMu Deed of Trust provided that the trustee would "reconvey the Property to the person entitled thereto, on written request of [WaMu], or following satisfaction of the obligation secured" by the deed. Id. ¶ 10.

         About a year later, in February of 2006, Rankankan refinanced his loan through non-party GreenPoint Mortgage Funding, Inc. ("GreenPoint"), which paid the full balance to WaMu. Id. ¶ 12. Rankankan also completed various administrative steps as instructed by WaMu to close the First HELOC and ensure that GreenPoint would have the first priority lean on the Property, which was a requirement of the refinance. Id. ¶¶ 12-14. Rankankan and GreenPoint believed that WaMu had closed the First HELOC and had recorded a reconveyance. Id. ¶¶ 13-14. GreenPoint subsequently recorded its own deed of trust (the "GreenPoint Deed of Trust") to secure the refinance, which it later assigned to U.S. Bank, N.A. Id. ¶¶ 15-16.

         In March of 2006, WaMu provided a second home equity line of credit (the "Second HELOC") to Rankankan, but did not inform Rankankan or GreenPoint that it had neither closed the First HELOC nor recorded a reconveyance. Id. ¶ 21. When Rankankan exceeded the credit limit of the Second HELOC, WaMu extended credit on the First HELOC without informing Rankankan that it was doing so. Id. ¶ 22. According to Rankankan, since the First HELOC should have been closed, any debt that he incurred to WaMu beyond the limit of the Second HELOC should have been unsecured. See id.

         In September of 2011, Chase, as successor to WaMu, recorded a notice of default based on a first position lien on the Property. Id. ¶ 17. U.S. Bank, believing that it was entitled to the first position lien, sued Chase and Rankankan for WaMu's failure to record a reconveyance after WaMu was paid in full on the First HELOC. Id. ¶ 18. In April of 2012, U.S. Bank dismissed Rankankan from that action and filed notice that it had reached a conditional settlement with Chase. Id. ¶ 19. Chase then recorded a subordination of the WaMu Deed of Trust pursuant to a confidential settlement agreement with U.S. Bank, giving priority to the GreenPoint Deed of Trust. Id. ¶ 20. Rankankan did not consent to or know the terms of the settlement. See Id. Rankankan alleges that after Chase recorded the subordination, "TITLE CORP informed RANKANKAN that the foreclosure would not go forward, " and Rankankan relied on that representation. Id. ¶ 47. In context and based on Rankankan's present arguments, "TITLE CORP" apparently refers to Defendant MTC.

         Chase recorded an assignment in 2014 formally assigning the beneficial interest under the WaMu Deed of Trust to Chase. Id. ¶ 23. In July of 2015, Chase recorded a substitution of trustee designating MTC as the trustee under the WaMu Deed of Trust. Id. ¶ 24.

         On February 16, 2016, Chase and MTC recorded a notice of trustee's sale based on the WaMu Deed of Trust. Id. ¶ 25. Rankankan provided Chase with evidence that the First HELOC was paid in full in 2006 and should have been closed, but Chase has refused to rescind either the notice of default[3] or the notice of sale. Id. ¶ 26.

         The Complaint includes eleven claims: (1) fraud; (2) breach of contract; (3) wrongful foreclosure; (4) "failure to record reconveyance"; (5) slander of title; (6) quiet title; (7) negligent misrepresentation; (8) unfair business practices; (9) intentional infliction of emotional distress; (10) negligent infliction of emotional distress; and (11) declaratory relief. Id. ¶¶ 27-104. Chase is named as a defendant to all claims; "Title Corp" is named as a defendant to all claims except those for fraud, breach of contract, failure to record, and unfair business practices; and U.S. Bank and all other persons claiming an interest in the property are named as defendants to the claims to quiet title and for declaratory relief. See Id. The term "Title Corp" is not defined in the Complaint, but based on Rankankan's arguments, and because MTC is the only defendant besides Chase and U.S. Bank named in the Complaint, the Court ...

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